MOSCOW (Reuters) - Vladimir Putin's ruling party clung to a much reduced majority in parliament on Monday after an election that showed growing weariness with the man who has dominated Russia for more than a decade and plans to return to the presidency next year.

President Dmitry Medvedev said the election was "fair, honest and democratic", but European monitors said the field was slanted in favour of Putin's United Russia and the vote marred by apparent manipulations including ballot box stuffing.

In the biggest electoral setback for Putin since he rose to power in 1999, the Central Election Commission said United Russia was set to lose 77 seats in the State Duma and end up with 238, a slim majority in the 450-member lower house.

At a government meeting, Putin emphasised that a simple majority of 226 was enough to pass most legislation and suggested it was sufficient to maintain t he stability he says he has helped secure for Russia.

"United Russia has been a significant part of the foundation of our political stability in recent years, so its successful performance in the election was important not just for the government but, in my view, for the whole country."

But Medvedev, who led the party into the election at Putin's behest, said voters had sent "a signal to the authorities" and hinted officials in regions where the party did badly could face dismissal if they do not shape up.

"United Russia did not do too well in a series of regions, but not because people refuse to trust the party itself ... but simply because local functionaries irritate them," he said. "They look and they say ... if that's United Russia, there's no way I'm going to vote for him."

Opponents said even United Russia's official result -- just under 50 percent of the vote -- was inflated by fraud. The leader of the Communist Party, on target to increase its representation from 57 to 92 seats, said the election was the dirtiest since the collapse of the Soviet Union in 1991.

Although Putin is still likely to win a presidential election next March, Sunday's result could dent the authority of the man who has ruled for 12 years with a mixture of hardline security policies, political acumen and showmanship but who was booed and jeered after a martial arts bout last month.

"Many Russians voted against the system and Putin is the head of that system," said Stanislav Kucher, a commentator with Kommersant FM radio station.

"Putin has a very difficult choice. To survive politically he needs to reform but he can only reform if he gets rid of many vested interests in the ruling circle. To stay as he is means the opposite of political survival."

Putin has cultivated a tough man image with stunts such as riding a horse bare chested, tracking tigers and flying a fighter plane. But the public appears to have wearied of the antics and his popularity, while still high, has fallen.

Many voters, fed up with widespread corruption, refer to United Russia as the party of swindlers and thieves and resent the huge gap between the rich and poor. Some fear Putin's return to the presidency may herald economic and political stagnation.

PUTIN SAYS OPTIMAL RESULT

Putin and Medvedev, the protege he ushered into the Kremlin when he faced a legal bar on a third consecutive term in 2008, made a brief appearance at a subdued meeting at United Russia headquarters late on Sunday.

Medvedev said United Russia, which had previously held a two thirds majority allowing it to change the constitution without opposition support, was prepared to forge alliances on certain issues to secure backing for legislation.

As Putin said on Monday, United Russia will have enough Duma seats to pass most laws without turning to other parties.

Putin has as yet no serious personal rivals as Russia's leader. He remains the ultimate arbiter between the clans which control the world's biggest energy producer.

But there was little to cheer for Putin, 59, who has dominated Russian politics since he became acting president when Boris Yeltsin quit at the end of 1999 and was elected head of state months later.

His path back to the presidency may now be a little more complicated, with signs growing that voters feel cheated by his decision to swap jobs with Medvedev next year and dismayed by the prospect of more than a decade more of one man at the helm.

COMMUNIST GAINS

The Communists made big gains and official projections put left-lea n ing Just Russia on 64 Duma seats, up from 38, and Vladimir Zhirinovsky's nationalist LDPR on 56, up from 40.

Many of the votes were cast in protest against United Russia rather than in support of communist ideals because the Party is seen by some Russians as the only credible opposition force.

"I voted against United Russia to support some kind of opposition in the country," said Tamara Alexandrovna, a pensioner in Moscow. "I've seen a one-party system and we cannot go back to that."

The other three parties on the ballot, including the liberal Yabloko, fell short of the 5 percent threshold needed to gain even token representation in the Duma.

A prominent party of Kremlin foes led by Putin's first-term prime minister Mikhail Kasyanov was barred from the ballot in advance because it was denied registration earlier this year.

United Russia's opponnts complained of election violations across the country spanning 9,000 km (5,600 miles).

They say the election was unfair from the start because of authorities' support for United Russia with cash, influence and television air time. International observers added weight to those claims.

Election preparations "were marked by a convergence of the state and the governing party, limited political competition and a lack of fairness," observers from the Organisation for Security and Cooperation in Europe OSCE.L and the Council of Europe's parliamentary assembly said.

The vote count "was characterised by frequent procedural violations and instances of apparent manipulation, including several serious indications of ballot box stuffing," the monitors said in their preliminary report.

"The country has never seen such a dirty election," said Communist Party leader Gennady Zyuganov, who dismissed the official results as "theft on an especially grand scale".

Zyuganov said police had barred Communist monitors from several polling stations and "some ended up in hospital with broken bones". Some ballot boxes were stuffed before voting began.

Medvedev said alleged violations must be investigated but asserted that there was no major fraud, saying, "All this talk about unrestrained use of administrative influence...where did this happen?"

He said United Russia's result reflected exactly its level of support among Russians -- "no more, no less. And in this sense the election was fair, honest and democratic."

The result is a blow for Medvedev, whose legitimacy to become prime minister in the planned job swap with Putin after the presidential vote could now be in question.

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